David Senra
00:13:01 · David Senra, Scott Kupor
[00:13:01] S0: What do you think those versions of you three back then would think about the outcome that played out over the next sixteen, seventeen years? [00:13:08] S1: When I did the math for myself and I was trying to convince my wife why in the middle of the global financial crisis we should pick our family up from North Carolina, go back to the Bay Area and do this thing, my math was like, okay, I'm pretty confident they'll raise the first fund, No idea quite frankly what happens after that, but my general calculus was like worst case, these funds take a long time, you know, we'll kind of weather through the financial crisis and, you know, these guys had always been very good to me in terms of taking care of me and I was like, look, you know, I'll find a job. I'll find another job basically if like this thing just doesn't pan out. That was kind of my general general back of the envelope calculus. I never imagined we'd get to where we were, and nor did I actually... Nor did I imagine we would get there as fast as we did, and I think that was the big thing. So Marc talked about this, but in literally like the first couple months after we closed the first fund, we invested in Skype. And yeah, if you remember Skype was part of eBay, right? Skype, it was bought by eBay. And it was like completely neglected inside of eBay. And yet amazingly, it had this incredible network effect. If you look at the numbers, like the numbers of subscribers just kept growing and growing. So we joined with Silver Lake at the time. I don't know if you know Egon Durban who runs Silver Lake.
00:13:08 · Scott Kupor, David Senra
[00:13:08] S1: When I did the math for myself and I was trying to convince my wife why in the middle of the global financial crisis we should pick our family up from North Carolina, go back to the Bay Area and do this thing, my math was like, okay, I'm pretty confident they'll raise the first fund, No idea quite frankly what happens after that, but my general calculus was like worst case, these funds take a long time, you know, we'll kind of weather through the financial crisis and, you know, these guys had always been very good to me in terms of taking care of me and I was like, look, you know, I'll find a job. I'll find another job basically if like this thing just doesn't pan out. That was kind of my general general back of the envelope calculus. I never imagined we'd get to where we were, and nor did I actually... Nor did I imagine we would get there as fast as we did, and I think that was the big thing. So Marc talked about this, but in literally like the first couple months after we closed the first fund, we invested in Skype. And yeah, if you remember Skype was part of eBay, right? Skype, it was bought by eBay. And it was like completely neglected inside of eBay. And yet amazingly, it had this incredible network effect. If you look at the numbers, like the numbers of subscribers just kept growing and growing. So we joined with Silver Lake at the time. I don't know if you know Egon Durban who runs Silver Lake. [00:14:13] S0: Michael Dell, I just saw him a few [00:14:14] S1: day Yeah.
00:14:14 · Scott Kupor, David Senra
[00:14:14] S1: day Yeah. [00:14:14] S0: Few nights ago. He speaks very highly of them. Yeah. She brought him up the
00:14:17 · Scott Kupor
[00:14:17] S1: other night. Exactly. Yeah. And and Michael Dell was part of that too, but it's literally like we did essentially a buyout. Like, it was like a crazy thing to do. We we had just gone on the road and told all of our investors we're doing early stage venture investing. And we hinted, by the way, this this Skype thing was going. So like, we pretty much said it was gonna happen, but we couldn't say it was gonna happen because, you know, it hadn't been done yet, so it wasn't actually a surprise for LPs, but it was clearly very different than the strategy we had laid out. And so we did this thing and immediately, of course, everybody attacks us and says, these guys are crazy, what the hell are they doing? Doing a buyout, it'll never work. And there was all kinds of stuff at the time, if you go back and read the stuff, you'll see it. There was this big IP dispute with the original founders like Janus and Niklas and eBay about who actually owned the fundamental underlying IP. So And much people looked at buying Skype, but nobody could get comfortable because they're like, gee, if we buy it, what if Janus and Niklas come out of the woodwork and say they own it and so do you really own the IP? You know, Egon's genius was, let's actually figure out a way to work with these guys. So we actually, you know, our bids came together and we actually worked collaboratively with these guys as a way to moderate this IP question. But anyways, everyone's like, look, this is crazy. But the beauty of it, literally eighteen months later, sold to Microsoft for four times what we paid, like eighteen months before. And so the news cycles were just unbelievable. And look, part of this business is momentum begets momentum, right? Which is true of so many businesses. And so we were able to actually like raise our second fund well ahead of what we had planned doing in part because the Skype thing just worked out so well. We returned, you know, literally, you know, half our fund to our LPs within eighteen months, which, you know, these days is obviously completely unheard of and even back then was unheard of. And it just completely changed the narrative. We also had a company called Nicira, which was in the networking space, Martin Casado, if you know Martin is one of the partners there today. His company got sold to Cisco early on in the first one.
00:16:04 · Scott Kupor, David Senra
So we had these like very quick early wins, which basically, you know, potentially could have gone the other way, but they didn't, they went in our favor and they basically just dramatically accelerated the progress. And key to our business model, right, to do the Michael Ovitz business model, we had to have enough of a fee stream to be able to hire all these other non investing Yeah. People, And you know, Marc talked about this before, but like, you know, what Marc and Ben did, they were very magnanimous. The two of them didn't take, they took no salary right at the beginning of the company because they wanted to basically take, you know, as much of the fees as they could to give it to me to go hire other people, you know, to build this thing out. But, you know, we needed another, you know, in order to kind of continue that build out, the second fund gave us, you know, a, you know, stacking fee stream that allows us then to say, okay, now we can actually double down on the strategy. So it was one of these things where like, you know, we had early success. It was also 2009, right? So again, middle of the global financial crisis, you know, you know this, but like, you know, the Sequoia guys put out this, you know, RIP presentation. Have you seen it? [00:17:01] S0: Was RIP good times? RIP good
00:17:01 · David Senra, Scott Kupor
[00:17:01] S0: Was RIP good times? RIP good [00:17:03] S1: times, right? It's literally like the world's coming to an end. We're all gonna die. Sounds a little bit like today, actually, now that I'm saying it. No one will ever raise any money, like put all your money under under your mattress. And so like we were this shiny gold, you know, like object in 2009 when everyone else was hunkered down and worried about their portfolio companies. So we had this enormous advantage, which is we put a shingle out and we say, hey, like we're open for business. And every other venture firm and rightly so, I understand it. Like they have these enormous amount of portfolio companies that they were very worried about whether they would survive or not. So, so much of like all that early momentum accrued to our benefit, which enabled us then to go raise the second fund, which gave us the funding to build out the services strategy. And that really kind of compounded in a way that I don't think we expected. Marc and Ben may tell the story differently, which is they always knew they always knew it would be a success. And I'm certain, I believe that, right? I mean, guys are